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WellPoint Systems Inc., - Set to benefit from rising energy prices

As the world economy gradually finds its feet again on the back of government stimulus packages in different parts of the globe, it is inevitable that energy prices would pick up. Rising energy prices generally spark heightened drilling and development endeavours as previously marginal projects now become economically viable

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As the world economy gradually finds its feet again on the back of government stimulus packages in different parts of the globe, it is inevitable that energy prices would pick up. Rising energy prices generally spark heightened drilling and development endeavours as previously marginal projects now become economically viable. Follows a glut of buying by investors as companies engaged in the oil services sector is bound to benefit from increased exploration and drilling activity.

We already see increased buying in the oil services sector from rig manufacturers to oil drilling companies. Some companies are however, yet to receive the attention they deserve particularly when they are in a niche market in the oil services industry. Canadian Venture listed WellPoint Systems Inc (TSX-V: WPS) appears to be one such case.

Some of our readers may not be quite familiar with WellPoint. The company is the premier provider of enterprise applications and related services for managing business in the global energy sector. The company has a diverse product line covering from upstream to mid-stream. WellPoint is the only enterprise solution provider on the Microsoft Dynamics AX business software platform targeting global energy companies. With operations worldwide, WellPoint certainly is bound to benefit from the revival in the global oil and gas industry.

WellPoint announced that it has received confirmation that a minimum US$3.3 million payment will be made to the Company from Export Development Canada (“EDC”). The payment is pursuant to the terms of an accounts receivable insurance policy taken by WellPoint to minimize commercial risks associated with a contract for an existing customer in South America. The payment puts the Company in a strong financial position to implement its business plan for the balance of 2009 and in coming years.

WellPoint will now recognise the entire US$3.3 million EDC payment as revenue under the South American contract in 3Q 2009. Since this contract for IDEAS software did not previously meet the requirements for revenue recognition under Canadian generally accepted accounting principles (“GAAP”), no revenue was recorded in prior periods. The proceeds received will be used to strengthen the Company’s working capital position and boost gross profit, EBITDA and net income in 3Q2009.

Ambitious plans are in store at WellPoint. Richard Slack, President and CEO confirmed that they will accelerate their efforts to enter into agreements with national oil companies and international oil and gas companies in the coming months both directly and through channel partners. The company has combined sales efforts with a risk management strategy insuring accounts receivable under certain contracts in view of challenging economic times said Slack.

The strategy has certainly paid off as WellPoint is about to receive $3.3 million minimum from EDC as a part of this arrangement.

About WellPoint Systems Inc.
WellPoint provides premier software and related services for managing critical operations within the energy industry. As a Microsoft Gold Certified Partner since 2005, WellPoint is the only Independent Software Vendor (ISV) and Microsoft Dynamics partner dedicated to the energy sector. It is breaking new ground with the creation of a more comprehensive, integrated energy software suite based on existing Microsoft ERP technology that utilizes state-of-the-art Dynamics AX® and .NET architectures. WellPoint also provides software and services under the BOLO, IDEAS International and iSoft brands. The company has operations in Denver, CO, Houston, TX, Livingston, NJ, Tampa, FL, Tunis, Tunisia and Pretoria, South Africa.

Quick facts: Wellpoint Systems

Price: - -

TSX:WPS
Market: TSX
Market Cap: -
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